is there a conclusive answer for this yet
gross IRR was good… and postiive… they made money… Gross IRR is calculated on what the GP thinks is the valation and GP will include distrobutions in the return calculation and hence 12% is the answer
was 12% b or c . My letter of choice for guessing was B, thats why I ask
there were 3 answers A -14 B 2 C 12
alright, 12 it is, thanks. no point for me 
i got -14. I just used the CF function of my calculator and put in negative capital invested each year, plus the distribution made. Sure I got it wrong, but was my best thought at the time
i calculated 12% increase over 3 years… so the answer i got was 4… btw i took my test in HK, so it very well could have different numbers than yours.
I got -14 first, but then I remembered the example in the book adding a “negative” number onto the Gross IRR calculation. That example kept prompting me to add operating results.
capital called down was 70mill? Total return including management fee was 78.4? Commited capital was 80mill. 78.4/70 = 1.12… therefore IRR was 4% that was my rational… the answers allowed were -14, 4, +14. My test was 6161 of Asia, so could be totally different than yours…
5151 test in Europe we had -14%, 4% and 12% does someone remember the operating result numbers? only these are important… the distributions do not matter in this case
europe was 5151
I think the final year was plus 60. Maybe -10, 30, 60. Something like that. I used tsttse’s logic. The gain was around 12% over the 3 years if you just summed the PIC and summed the losses and gains. Then I figured a 4% annual figure was reasonable. I don’t know the formula and there are almost certainly parts of the question I am ignoring. If someone told me they knew for sure the answer was +14% then I wouldn’t argue with that. I really don’t know.
IRR is already annualized. You definitely don’t have to divide by 3 or anything.
o ya u r right i added it all, totally didn’t take time value of money into account… that was so wrong, what a rookie mistake… should have checked return per year…
you use either operating results or distributions not both, right? operating results is what the fund made and you can only distribute what you made.
So what is the right answer? I picked up 12% 'cuz I have friends working in this industry and always brag about double digit annualized returns. Therefore chose to select 12% instead of -ve or paltry 4% return (though I understand that the numbers given in the exam could be well dummy)
you use a TVM approach with the operating results… you dont take distributions… I just dont rememer the numbers for the operating results to calculate it now
Had the 5151 exam in Dallas, guessed 12% because it seemed logical given the amount of money they made/distributed for the IRR to be a whole hell of a lot higher than 4%.
adavydov7 Wrote: ------------------------------------------------------- > Had the 5151 exam in Dallas, guessed 12% because > it seemed logical given the amount of money they > made/distributed for the IRR to be a whole hell of > a lot higher than 4%. my thoughts exactly! so what was the right answer?
Isn’t Gross IRR meant to be just realized return? The operating results are unrealized, plus if you include them, you are double counting because the distributions are paid out of the operating results.